BTCL INTERNAL AUDIT SUBSIDIARY AUDIT

AUDIT PROGRAMME FOR FULL AUDIT OF BTCL

 AUDIT OBJECTIVES
1. To review the general operations of the business office for compliance with BTCL's policies,
procedures, regulatory requirements and industry best practices.

2. To review the application of the whole systems of controls for adequacy and effectiveness in
the BTCL/business offices.
3. To verify the accuracy, completeness and validity of information/ records to management.

4. To ascertain that the controls (Operations, financial reporting and administration) are
adequate and effective.
5. To evaluate the performance of the company vis-à-vis- the set budget.
6. To note any inadequacies and make relevant recommendations.
 

AUDIT PROGRAM RISK

RATINGS
1. PERFORMANCE REVIEW-WEIGHT (6%)  
 Obtain company’s management accounts and compare actual 6.00%
performance with budget
 Review sources of income for possible leakages-Income assurance
review
 Check for evidence of expense monitoring
 Perform expense to income ratio analysis
 Review business performance in the light of development in country’s
economy, politics and social events
 Confirm MPR sessions are held monthly, regularly
 Confirm action points are followed up
2. OPERATIONAL REVIEW-WEIGHT (18%)  
[A] New Accounts- New Loans - Weight [3%] 3.00% 
I. TO ascertain how many new clients came & took a loan and their
performance
II. Review all these account for complete documentation in compliance
with New client Policy of BTCL

III. Check whether all the new clients money has been banked to their
Account

[B] Managers Cheque Review: (0.50%) 0.50%

I. Obtain and review Cheque issued &register in proper Books and signed by
the person taking the loan
iii Confirm that customers accounts were promptly debited with value of draft

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request
iv. Compare managers stub(cheque) with register for seriality of issuance
v. Confirm that all cancelled cheque were mutilated and accounted for.
[D] Treasury Operations- Weight [1.00%] 1.00% 
I. Check that day cash position are matching with the money mouse

II. Reconcile balance per GL proof (prepared by operations) with balance

per Money Mouse
[E] Cash and Vault - Weight [1.50%] 1.50% 
I. Agree balance per Safe with physical cash and system balances

II. Check for physical security of the business environment and that of the
safe
III. Check for dual control of the safe to ensure no compromise of the keys
or combination
IV. Agree cash balance with the cashier ( proof Cash Balances)

V. Ensure cash book and system are properly balanced on a daily basis.

VI. Check all Frauds, Forgeries, Cash Shortages/Overages on CIT/COP are

duly reported.
VII. Check for insurance cover for the business.
VIII. Ensure integrity tests are conducted for all cashier
[G] BTCL Balances - Weight [1.50%]
I. Obtain and review all the BTCL Reconciliation Statements for 1.50% 
transactions while ensuring open items are within 3 months of age.

[H] GL REVIEW/PROOFS OF ACCOUNTS [1.50%]

1.50% 
 Obtain the proofs of all balance sheet items and agree the balances on
the schedules to the respective GL balances as at the review date.
 Select a sample of outstanding items and crosscheck posting in the GL
Accounts [amount, date, narration, etc.]
 Review the schedules to confirm that no outstanding item is older than 3
months
[I] Expenditure Review - Weight [6%]  6.00%
I. Obtain Trial Balance and vouch expenditure of major items for
approvals and complete documentation.
II. Ensure that for all trainings, concurrence of is sought
III. Obtain Schedule of Fixed Assets and ascertain proper approval,
ownership and existence.

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IV. Check for evidence Expenses

3. REGULATORY COMPLIANCE REVIEW-WEIGHT (5.0%) 5.00% 
I. Obtain and review Regulatory return files for regular and prompt
rendition of Returns detailed below:

Return Due by
BS100 - Statement of Assets and Liabilities 15th (monthly)
BS100A - Quarterly Computation of Capital Adequacy 15th (quarterly

BS110 - Quarterly Statement of Income and Expense 15th (quarterly

BS120 - Quarterly Schedule of Bad and Doubtful Debts Provisions 15th (quarterly
BS130 - Quarterly Return on Large Exposures and Credit 15th (quarterly
Concentrations
BS140 - Quarterly Return on Advances Extended to staff 15th (quarterly

Quarterly Report on credit Classification and Provisioning 15th (quarterly

Quarterly Report on large non-performing and bad debts written off 15th (quarterly
15th (Semi
Shareholders’ List
annual/half yearly)
Maturity Analysis of Assets and Liabilities 15th (monthly)
Tuesday (based of
Monthly Statistical Report
previous wk)
Tuesday (based of
Liquid Assets Report
previous wk)
Tuesday (based of
Cash Reserves Report (new)
previous wk)
Tuesday (based of
Weekly Derivatives Return
previous wk)
Monthly NPSS Return 15th (monthly)
II. Review all Statutory Remittances [e.g. Corporation Tax, PAYE, VAT,
etc.] to ensure that they adequately provided for and regularly remitted.
III. Review all Company Registration Documentation to ensure that they are
complete in line with local legal/legislative requirements.

4. INTERNAL AUDIT -WEIGHT (5.00%)  5.00%

I. Check to ensure that approved Audit Plan is in place.

II. Check to ensure that approved Audit Programs for Business Offices is
in place.
III. Review budgeted reviews against actual noting any gaps
IV. Check to ensure that approved Compliance Proof Charts is in place.

V. Review the Processes and procedures and Proof Charts for adequacy
and completeness.
VI. Ensure they are regularly reviewed and updated.
5. RISK MANAGEMENT: (6.00%) 6.00%
 Confirm the existence of Risk management framework in the office

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 Check if there is a person who is charge of managing Risk

 Review all measures put in place to mitigate against perceived
Operational, Credit, administration and other form of risks
6. PROCESS EFFICIENCY REVIEW-WEIGHT (6.00%)
I. Review customers' complaints, enquiries for prompt  1.00%
resolution/Reponses to ensure efficient service delivery.
II. Review of customers’ statements rendition process.  1.00%
III. Review the archiving process to ensure the environment is conducive,  1.00%
docs are stored in collapsible boxes, there is proper indexing, fire
extinguishers, etc.
IV. Check to ensure the BTCL is compliant with ISO 9001 certification  3.00%
standard requirements such as displaying the QUALITY VISION
STATEMENT on office space of BTCL, every staff knows the location
of the Quality Management Policy and has unrestricted access to it, etc.
7. LEGAL SERVICES REVIEW-WEIGHT (1%)
I. Obtain the list of all court cases pending judgment and review to ensure  1.00%
that:
 A file is opened for each case
 There is a valid contract between BTCL and the solicitors
 There is evidence of proper follow-up on cases
II. Ensure there is an approved list of solicitors in place.
8. POLICY REVIEW -WEIGHT (4.0%)
I. Obtain all policies and procedures used in the BTCL.  4.00%
II. Review the policies for completeness, adequacy authenticity.
III. Confirm annual updates and validation. Perform Gap Analysis.
IV. Review for international standardization of policies.
V. Confirm compliance with all Group Policies.
9. NON-CREDIT PRODUCTS REVIEW (5%) 5.00%
10. RELATIONSHIP MANAGEMENT: (5.00%) 5.00%
 Check for the existence of clear business strategy for marketing staff to
follow
 Check for list of prospective customers and evidence of visitations
 Confirm that this list/schedule is not static
 Confirm that call memos are prepared and properly filed.
 Check for supervisors initial/signoff on call memos as evidence of
review
 Confirm that individual files were opened for customers
 Note percentage of prospective customers converted within the period.

11. HUMAN RESOURCES REVIEW –WEIGHT (5.00%) 5.00% 

[B] REVIEW OF RECRUITMENT OF OTHER STAFF
I. Check the procedures for short listing candidates for interview to
ascertain integrity and transparency in the process

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II. Obtain and review their files for appropriate approvals and
completeness of documentation e.g. Confirmation of Credentials,
Medical Certificate report, Pre-employment test and reports etc
III. Check the existence of staff handbook.
IV. Confirm that candidates have the minimum educational requirements
V. Look out for evidence of staff de-motivation
VI. Review of all contract with employee for approval

[C] REVIEW OF SALARY & STATUTORY PAYROLL DEDUCTIONS

I. Obtain and review latest Payroll prior the Audit to ascertain correctness.
II. Carry out a sample check on staff deductions to ensure that statutory
deductions are complied with. These includes NHF Pension deductions
and Payee Tax respectively

[D] PERFORMANCE APPRAISAL

I. Check for the existence of a performance appraisal policy in line with
group (e.g. Confirmation appraisal, monthly/yearly appraisal)
II. Check that information contained in the appraisal forms are adequate
and simple
III. Confirm the existence of KPIs for all job functions
IV. Confirm joint appraisals for key staff handling sensitive roles CEO and
functional Heads
V. Confirm that an appeal process for employees who are not satisfied with
their ratings is in place
VI. Confirm that a plan is in place to ensure regular training for evaluators

[E] DISCIPLINARY PROCEDURE

I. Check for the existence of company’s policy on disciplinary
issues/Employee misconduct in line with company policy.
II. Ensure that Disciplinary committee is in place.
III. Confirm that all reported matters on staff misconduct are properly
investigated and signed off report forwarded to DC

[G] EXIT PROCEDURE/EMPLOYEE SEPARATION/TERMINATION

POLICY
I. Check for the existence of company policy on staff exit /termination in
line with group policy
II. Verify that exit interviews were conducted for all ex-staff
III. Check to ensure all staff resignation, termination etc were signed-off by
the approved officers and ex-staff were de-listed from payroll, finacle,
intranet, etc.

[H] TRAINING & DEVELOPMENT/SUCCESSION PLANNING:

I. Obtain and review training programme/plan in place
II. Check to ensure that the programme/plans cut across all categories of
staff
III. Confirm that such trainings are regularly adhered to

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IV. Agree budget with actual to assess effectiveness

V. Check for the existence of career advancement/succession plan
VI. Confirm that identified courses for staff are collated and trainings
effected
VII. Check that feedback from staff are obtained to assess the effectiveness
and quality of courses
VIII. Check for succession plan

12. CORPORATE GOVERNANCE REVIEW-WEIGHT (5%) 5.00%

I. Check that meetings (Board and Executive management) are held
regularly and minutes up-to date
II. Confirm the existence and use of Corporate Governance Code.

III. Check and confirm full implementation of company Structure.

IV. Observe effectiveness of Management supervision
13. ENVIRONMENTAL REVIEW-WEIGHT (1%) 1.00% 
I. Assess the environment for ambience, security and orderliness
14. CORPORATE SERVICES REVIEW-WEIGHT (5%) 5.00% 
MOTOR VEHICLES
I. Obtain a BTCL wide list of Motor Vehicles.
II. Obtain the list of motor vehicles purchased during the period, ensure
quantity discounts, etc are obtained and properly utilized.
III. Confirm the existence and condition of the motor vehicles.
IV. Review and ensure optimal allocation of motor vehicles BTCL wide.
V. Review the policy on status cars not taken over by staff.

OBSOLETE AND IDLE ASSETS

I. Obtain a BTCL wide list of fixed assets.
II. Confirm the existence and condition of the assets allocated to their
offices.
III. Circularize unit heads in the office to confirm the existence and
condition of the assets .
IV. Physically verify the existence and condition of obsolete/idle items

PROCUREMENTS
I. Obtain list of items procured by the BTCL for the period January 1,
2015 to July 31, 2017.
II. Check the documentation to ensure that there is an LPO awarding the
contract, and that relevant invoices, goods received note, etc are
attached.
III. Check that the LPO’s has approval in line with the BTCL’s policies.
IV. Obtain BTCL’s market survey file to ensure that items purchased were
at the appropriate price.
V. Obtain the list of approved vendors and check that contracts are
awarded to only approved vendors.
VI. Review the BTCL’s WIP account for items paid for but are yet to be

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delivered.

LOGISTICS/PROTOCOL
I. Obtain the organogram and job description of the protocol offices.
II. Check that there is a desk manual for activities in the unit.
III. Review the activities of the unit vis-à-vis activities in other units and see
where there could be synergy for maximum benefit.

VENDORS’/CONTRACTORS LIST
I. Obtain the list of approved vendors
II. Obtain management approval for each of the vendors.
III. Obtain the vendors/contractors rating of job performance (if any)
IV. Obtain list of blacklisted contractors
V. Obtain report if any on what competitors pay on similar services.
16 IT RESOURCES REVIEW-WEIGHT (10%) 10.0%
IT Support to review the following:
I. Review the Architecture process - A brief write up on the software,
hardware and communication network.
II. Check for IT architecture approval
III. Review Contracting and outsourcing processes for compliance
IV. Review the adequacy of Information security System in place
V. Check Internet Management for security and Compliance
VI. Review staff profiles/files for adequacy and competence
VII. Check for installation of Anti-virus; Vulnerability & Threat
Management
VIII. Review Computer Operations in general
IX. Review for security and adequacy of Networks
X. Carry out a review of Security Management/Independent Review
XI. Review company’s Problem Management approach for adequacy
XII. Review Company’s Change Management approach
XIII. Review Premises and Loan for adequacy of security
XIV. Confirm the existence and adequacy Application Support Unit
XV. Confirm that Business Continuity Plan is in place
XVI. Review licenses for alls software application in the company
XVII. Review Service level agreement with vendors and verify compliance.
XVIII. Review of software access control for adequacy
XIX. Confirm that there is an insurance cover in place for IT equipments
XX. Check for possible income leakage

17. CREDIT REVIEW -WEIGHT (8%) 8%

1. Generate a report of all accounts in debit as at the date of the audit.
i. Generate a report of all credit Loan approved/availed within the period.

2. i. Obtain the register of loans & advances maintained in the office (if
any) and compare with the downloaded reports to confirm the
completeness of the total population of files for review.

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ii. Obtain the customer loan files for review and confirm that
the total number of files given is complete.
3. Obtain the signatures of credit approving officers for the branch, and
for the Credit Risk Management division, to facilitate re-verification of
approval signatures on loan documents.
4. Review the files for documentation and due approval process,
including obligor limits, turnover, disbursement authorization,
securities, indemnities etc. to confirm compliance with policy and note
if there are abuses or irregularities. The following steps should guide
the review process:

4.1 Approval/Unauthorized Loan:

i. Confirm if the loan was approved by authorized officers, and if so, if it

had the required number of approving officers.
ii. Ascertain if the approvals were within the authority limits of the
approving officers.
iii. Ascertain if the Loan are covered by approved product papers.
iv. Select some of the Loan (using such criteria as amount, performance
state, undelivered statements of account, consistent roll-overs, etc.) and
send to the approving officers for re-confirmation of their
signatures/approvals, and hence confirm that the Loan were duly
approved by the designated officers.
v. Identify any facility that was not duly approved.
4.2 Review of the Credit Analysis / Approval Process

i. Confirm that the credit met the following criteria:

a. If the customer was rated;
b. If the rating was within the risk acceptance grade;
c. If the customer falls within the acceptable industries defined
in the credit risk management policy.
d. If the amount approved falls within the limit available for
customers within the risk grade and industry. Otherwise,
confirm if due approval was obtained for any exception.
e. That the authorized amount did not exceed the BTCL’s
internal lending limit for a single customer, without the
required approval. In any case the approved amount should
not exceed the legal lending limit.
f. That the collateral obtained for the facility is in compliance
with that defined for customers of that risk grade and
industry.

4. 3 Securities Documentation:
a). General
(i) Ascertain that the securities obtained for the Loan are in line
with the credit policy requirement.
(ii) Ascertain if collaterals were perfected or in a perfectible state

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before disbursement.
(iii) Ascertain if the collateral is adequate to cover the facility
exposure.
(iv) Ascertain if documentation deferrals were duly approved.
(v) Check the existence of a Security Register and Security files.
(vi) Confirm if Securities files are kept in fireproof safes in the
strong room.

d). Release of Securities / Securities Documents

(i) Confirm the existence of a Securities Register. This should have

a column for Security releases.
(ii) Confirm that the approving signatures on the request letter for
release of securities were those of the authorized signatories.

(iii) Confirm that all policy and procedural requirements were

complied with.
4.4 Credit Disbursement

(i) Confirm if all terms and conditions precedent to draw down

were met before disbursement, except where there were
deferrals. Confirm the extent of regularization with the deferred
documents.

4.6 Account Opening Documentation

(i) Confirm if the following documents are available in the account
opening files of corporate customers in the loans and advances
schedule:

(a) Board Resolution,

(b) Form CO7,
(c) Memorandum
(d) Bank statement
(e) Collateral
(f) Valid means of Identification,
(g) Utility Bill,
(h) Address Verification,
(i) Passport photograph.
(j) Search Report
(k) etc

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4.7 Cash Collateralized Loan

(i) Generate a report to identify all cash collateralized Loan booked
in the office.

4.8 Income Recognition

(i) Confirm if all interest income on was fully receipted

(ii) Confirm that all processing fees as approved & Recorded in the
system
(iii) Generate a report to identify interest rates that are below the
15% Mark.

4.9 Identify any facility with nil turnover for a period of between 1 to 3
months.
4.10 Prudential Classification

(i) Obtain the Prudential classification schedules separately from

both the Credit Risk Management division and the External
Reporting division, and compare to identify discrepancies.
(ii) Obtain the Loan Loss Provisioning Report from the Credit Risk
Management.
(iii) Independently generate a report of system classification of
accounts and compare with the above reports for completeness
and accuracy.
Note differences.
(iv) Confirm the adequacy of provisions on the non-performing
accounts in line with the prudential guidelines. Obtain the Loan
Loss Provisioning Report from Credit Risk Management, and
identify the accounts for up to 90 days and above for which
provisions are not being made or for which the provisions are
inadequate.
(v) Identify any classified account for which interest was not
suspended.

4.11 Structured Repayments (Term Loans, Leases, No-Wahala

Loans etc.)

(i) Confirm if repayments are taken on due dates. Generate a

schedule of repayments and note the number of defaults (if
any).
(ii) Note repayment defaults still outstanding.
(iii) Note the level of follow-up by the office on defaults.

4.12 Past Due Obligations

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(vi) Generate a report of facility accounts with outstanding

repayments that have become due.
(vii) Confirm if the outstanding are at default penal rates.

(viii) Take note of repayment defaults outstanding for up to 45 days

and consider additional information that could cause the
account to be reclassified for provisioning and suspension of
interest.

4.13 Expired Loan

(i) Extract expired Loan from the Risk Asset Report and from the
Account Performance Report (Audit Script).
(ii) Ascertain the reason / cause of the default in liquidating the
facility (credit analysis, approval, disbursements,
deferrals/waivers of conditions precedent to drawdown, poor
monitoring etc).
(iii) Obtain the Loan Loss Provisioning Report from Credit Risk
Management. Identify the expired accounts for up to 90 days
and those for which provisions are not being made or for which
the provisions are inadequate.
(iv) Identify any account which interest rates are not at default penal
rates.
(v) Identify any account which interest income is not suspended.
(vi) Note recovery action (if any) taken by the Credit Recovery
Group.
(vii) Note the extent to which recovery could still be possible, in line
with information obtained from the Credit Recovery Group and
any other source.
(viii) Ascertain if there is collateral for the loan; adequacy of the
collateral, and realisability (based on discussion with the Credit
Recovery Group and any other source of information).

4.14 Director-Related / Related Parties

(i) Using the CBN monthly Report on Director/Related Parties
Credit, and any other information obtained in the course of the
audit, identify any facility that could be directly or indirectly
considered as a director-related or related party transaction.
This would include loans to subsidiaries, associate companies,
directors and their spouses, Senior Management staff and their
spouses, companies in which directors or Senior Management
staff have interests.
(ii) Where the facility falls into the above category, confirm that it
was granted at arms length, i.e. at fairly existing commercial
terms devoid of abnormal and unjustifiable concessions.
(iii) Ascertain that theses credits were also approved in line with the
credit policy of the BTCL (i.e. approving authority, limit,
securities etc.)
(iv) Ascertain the existence and adequacy of collaterals for the

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Loan.

4.15 Loan Above Authorized Limit

(i) Identify any facility being operated above the authorized limit.
(ii) Ascertain if the excess over limit is duly approved in line with
the BTCL’s credit policy.
(iii) Confirm if the facility is adequately secured, including the
excess.
(iv) Where the excess over the authorized limit is unauthorized,
ascertain if the excess is running at default /unauthorized
interest rate.
Loan Above Authorized Limit
(v) Identify any facility being operated above the authorized limit.
(vi) Ascertain if the excess over limit is duly approved in line with
the BTCL’s credit policy.
(vii) Confirm if the facility is adequately secured, including the
excess.
(viii) Where the excess over the authorized limit is unauthorized,
ascertain if the excess is running at default /unauthorized
interest rate.

4.16 Statement of Account Rendition

(i) Review the Statement Rendition Register and obtain evidence

of statement rendition and due acknowledgement by the
customer.
(ii) Review undelivered or returned statements register and identify
facility accounts for which statements have not been
printed/rendered to the customer for three consecutive months.
(This category of customers should be circularized).

4.17 Credit Files

(i) Confirm the existence of Credit file or mirror file for every
facility.
(ii) Confirm the existence of vital credit documents, such as the
CAM, Offer/Acceptance Letter, CIM/ACS, Call Memos, etc. in
the credit file.

4.18 Credit Recovery

(i) Obtain and confirm recoveries within the period, and compare:
(a) with the total lost accounts in the office.
(b) with the budget for the year.
(c) with the previous year’s recoveries.

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4.19 BA/CP Documentation and Booking

(i) Confirm if customer’s (investor) application is in place and if

the application states the customer’s intention to invest in a
BA/CP.
(ii) Ascertain if there was sufficient funds available for the BA/CP
investment to match the asset. Obtain and review the Treasury
Report for the period necessary confirmation.
(iii) Identify BAs/CPs for which there were no custodial
agreements, or where these were not properly executed.
(iv) Identify BAs/CPs not signed by the authorized signatories of
the customer (borrower). Check the customer’s mandate.
Circularize some customers for reconfirmation.
(v) Identify BAs/CPs not signed and stamped “Accepted” by the
authorized signatories of the BTCL. Circularize some of the
authorized signatories for re-confirmation.
(vi) Identify BA / CP investment advice not delivered to the
investors. Check statement delivery register for
unacknowledged mails.
4.20 Regulatory Issues
a) Confirm that the facility does not contravene regulatory provisions,
namely:
(i) Legal Lending Limit
(ii) Prudential Classification
(iii) Related Parties / Director – Related
(iv) Unsecured Employee Loans exceeding annual entitlements.
(v) Unsecured loans to customers
(vi) Lending for purposes not allowed by regulation

b) Review the system set-up, and thus confirm if the facility was properly
set up in the system in line with the approved terms, such as rates, limits,
tenor, maturity date, turnover covenants etc. Note any discrepancies.

c) Obtain a report of all system maintenance done on facility accounts (i.e.,

on interest rates, tenor, maturity date, account name etc.) within the period.
Carry out further review on such modifications, obtaining satisfactory
explanations, and noting any unapproved or irregular modification.

d) Take particular note and obtain satisfactory explanation of the following

red flags, where they are observed:
(i) Unauthorized debit balances and unauthorized excess.
(ii) Loan enabled in the system by the same inputer and authorizer.
(iii) Loan in the books of the branch those were initiated or
consummated from another branch.
(iv) Preferential facility rates in the system.

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(v) Facility accounts with unexpired limits, but not in debit balance
as at the time of the review.
(vi) Several incidences of returned cheques on a facility account.
(vii) Customers whose Loan have been rolled-over for three
consecutive times and more.
(viii) Liquidation of loans by way of transfers from other customers’
accounts.
(ix) Cash-backed credit Loan, where the backing deposit or
investment account does not belong to the facility customer.
(The third party lien should be reconfirmed from the owner of
the deposit /investment).
(x) Where the account opening date is less than six months or the
period allowed under the credit policy.
(xi) Where the customer’s account was dormant but was newly re-
activated (e.g. facility between 0 – 60 days after re-activation).
(xii) System amendments / maintenance on facility accounts.

(There are audit scripts/ reports to facilitate these reviews).

e) Select some running as well as un-repaid facility customers, using such

criteria as performance state, amount, undelivered statements, etc and visit
their business premises to confirm the existence of the customer and his
location, and the genuineness of the Loan/balances carried in the BTCL’s
books.

In the absence of visitation, such customers should be circularized.

f) Document all exceptions noted and obtain written responses to the
exceptions from the BM, the CSM and the RCO.
The explanations should be further reviewed, where they are not
satisfactory.

OTHERS:
 Confirm the existence of risk management framework
 Look out for major control issues not aware of by management
TOTAL 100.00%

Prepared By ……………… Reviewed By………………………..

Accountant

Approved By ……………………………
Managing Director

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